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Our View On Magyar Bancorp's (NASDAQ:MGYR) CEO Pay

Simply Wall St
·3 mins read

John Fitzgerald became the CEO of Magyar Bancorp, Inc. (NASDAQ:MGYR) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Magyar Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Magyar Bancorp

Comparing Magyar Bancorp, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Magyar Bancorp, Inc. has a market capitalization of US$54m, and reported total annual CEO compensation of US$712k for the year to September 2019. Notably, that's an increase of 15% over the year before. We note that the salary portion, which stands at US$430.8k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$505k. This suggests that John Fitzgerald is paid more than the median for the industry. Moreover, John Fitzgerald also holds US$537k worth of Magyar Bancorp stock directly under their own name.

Component

2019

2018

Proportion (2019)

Salary

US$431k

US$411k

60%

Other

US$282k

US$206k

40%

Total Compensation

US$712k

US$617k

100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Our data reveals that Magyar Bancorp allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

A Look at Magyar Bancorp, Inc.'s Growth Numbers

Magyar Bancorp, Inc. has seen its earnings per share (EPS) increase by 20% a year over the past three years. It saw its revenue drop 1.5% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Magyar Bancorp, Inc. Been A Good Investment?

With a three year total loss of 28% for the shareholders, Magyar Bancorp, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Magyar Bancorp pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its earnings per share growth, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think John is earning a very handsome sum.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Magyar Bancorp that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.